Correlation Between South Pacific and Fairfax Fin
Can any of the company-specific risk be diversified away by investing in both South Pacific and Fairfax Fin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining South Pacific and Fairfax Fin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Pacific Metals and Fairfax Fin Hld, you can compare the effects of market volatilities on South Pacific and Fairfax Fin and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in South Pacific with a short position of Fairfax Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Pacific and Fairfax Fin.
Diversification Opportunities for South Pacific and Fairfax Fin
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between South and Fairfax is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld and South Pacific is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on South Pacific Metals are associated (or correlated) with Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of South Pacific i.e., South Pacific and Fairfax Fin go up and down completely randomly.
Pair Corralation between South Pacific and Fairfax Fin
If you would invest 45.00 in South Pacific Metals on November 1, 2024 and sell it today you would earn a total of 3.00 from holding South Pacific Metals or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 9.52% |
| Values | Daily Returns |
South Pacific Metals vs. Fairfax Fin Hld
Performance |
| Timeline |
| South Pacific Metals |
| Fairfax Fin Hld |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
South Pacific and Fairfax Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Pacific and Fairfax Fin
The main advantage of trading using opposite South Pacific and Fairfax Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Pacific position performs unexpectedly, Fairfax Fin can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fairfax Fin will offset losses from the drop in Fairfax Fin's long position.| South Pacific vs. Rogers Communications | South Pacific vs. Canadian Utilities Limited | South Pacific vs. Nova Leap Health | South Pacific vs. Doman Building Materials |
| Fairfax Fin vs. Osisko Metals | Fairfax Fin vs. South Pacific Metals | Fairfax Fin vs. Solid Impact Investments | Fairfax Fin vs. CNJ Capital Investments |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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